Climate justice has been discussed in the focal point of law, economics and governance. The implementation of climate stability accounts for the most challenging contemporary global governance predicament that seems to pit today’s against future generations in the trade-off of economic growth versus sustainability. As a novel angle towards climate justice, we propose a behavioral economics solution to elicit future-oriented loss aversion. In an overlapping-generations framework, we solve the climate change abatement aversion in the fear of costs curbing economic growth by building on Sachs (2014). The current generation thereby mitigates climate change financed through bonds to remain financially as well off as without mitigation while improving environmental well-being of future generations. This intergenerational tax-and-transfer policy turns climate change mitigation into a Pareto improving strategy. Sachs’ (2014) discrete model is integrated in contemporary growth and resource theories. We analyze how climate bonds can be phased in a model for a socially optimal solution. We also test if the climate change debt adjusted growth model stays within the bounds of a sustainable fiscal policy by employing nonlinear model predictive control (NMPC), which solves complex dynamic systems with different nonlinearities. Overall, shifting the costs for climate abatement to the recipients of the benefits of climate stability appears as novel, feasible and easily-implementable solution to nudge overlapping generations towards future-oriented loss aversion in the sustainability domain.
US: T 001 917 929 7038, Julia.Puaschunder@newschool.edu
EU: M 0043-69917250979, Julia.Puaschunder@wu.ac.at
Financial support of the Association for Social Economics, Fritz Thyssen Foundation, The New School for Social Research New York, Prize Fellowship of the Inter-University Consortium of New York, Tishman Environment and Design Center, University of Vienna and Vienna University of Economics and Business is gratefully acknowledged.
Intergenerational climate change burden sharing through bonds. With W. Semmler & H. Maurer.
Puaschunder, J. M. (forthcoming). Trust and reciprocity drive common goods allocation norms. Oxford Journal: An International Journal of Business & Economics.
Puaschunder, J. M. (2015). ‘On the social representations of intergenerational equity.’ 15th World Congress of Social Economics. The Association for Social Economics. Brock University, St. Catharines, Canada, June 21-22.
Puaschunder, J. M. (2015). ‘A behavioral theory of climate justice: Macroeconomic nudging future-oriented loss aversion through intergenerational climate burden sharing bonds.’ The New School for Social Research, Department of Economics, The New School, New York, USA, April 17.
Puaschunder, J. M. (2014). ‘On Eternal Equity in the fin-de-millénaire,‘ Harvard University, Faculty of Arts and Sciences, Cambridge, MA, USA, December 17.
Puaschunder, J. M. (2014). ‘On Eternal Equity in the fin-de-millénaire,‘ The Schwartz Center for Economic Policy Analysis, Department of Economics, The New School, New York, USA, December 5.
Puaschunder, J. M. (2014). ‘On Eternal Equity,‘ Department Global Business and Trade, Vienna University of Economics and Business, Vienna, Austria, EU, May 26.